What Restaurants Are Doing To Keep Their Doors Open : The Indicator from Planet Money Restaurants are going out of business in droves. But some are battling hard to keep their doors open.
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Can Restaurants Reopen?

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Can Restaurants Reopen?

Can Restaurants Reopen?

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About two years ago, Lester Gouvia opened Norma G's restaurant in Detroit, Mich. It serves Caribbean food. Lester was inspired by the food his mom used to cook for him in Trinidad.

LESTER GOUVIA: Very simple. Very basic. But just could take anything and stretch it and just make it so tasty. And nothing complicated.

VANEK SMITH: Well, maybe a little complicated.

GOUVIA: Really, right now, the oxtail goes like crazy. I can't stop making enough oxtail. So we do what is called oxtail sliders. And it's the braised oxtail that we break off of the bone, and then we actually add a chipotle mayo and a chipotle slaw, with a red cabbage slaw on top of that, and we serve that with my macaroni pie.


Oh, my God.


GARCIA: I'm having trouble talking because I'm salivating right now.

VANEK SMITH: I'm having trouble talking, too.


GARCIA: And, apparently, this applies to a lot of people because, two years in, Lester says that Norma G's was doing well - had about 90 seats, lots of takeout and a crowded bar. Lester had 11 employees. And then coronavirus hit. Lester had to lay off all but two of those employees and go all takeout.

VANEK SMITH: The takeout business went well. Many nights, Lester had more orders than he could fill. But the money just was not the same. He was bringing in less than half of what he used to. Lester was able to cut some costs. He deferred rent payments and some loan payments. But a lot of the bills just kept coming.

GOUVIA: You still have the lights, the gas. You still have the water bill from Detroit Water Sewer Department. You still have your food costs, all your supplies because you're still cooking the same menu. So those bills didn't go away.

GARCIA: Lester was incredibly relieved last month when Detroit allowed restaurants to open back up. But even so, social distancing meant way fewer customers. Lester went from about 90 seats to 45. And he did hire back a few of the workers that he had laid off. But Lester is still not sure what this will mean moneywise. After all, half the seats means half the money, and restaurants operate on really thin margins as it is.


VANEK SMITH: And I'm Stacey Vanek Smith.

For most restaurants, the last four months have been devastating. The majority of restaurants in the U.S. are independently owned and don't have a lot of money stored away for tough times.

GARCIA: And it's not just the little guys; big chains are struggling, too. A number of franchise companies operating branches of IHOP, Wendy’s, Pizza Hut and Le Pain Quotidien filed for bankruptcy recently, as did the parent companies of Chuck E. Cheese, Fig & Olive and Souplantation. And this is really bad news for the whole U.S. economy because the food services industry employs more than 10 million people in the U.S., and a lot of those jobs are not coming back.

VANEK SMITH: Today on the show - the restaurant business. Now that cities are starting to reopen, many restaurants are trying to find a way to get customers back in, get back to business. But in this new reality of social distancing and government regulation, the numbers don't always add up.


GARCIA: Right now restaurants all across the country are trying to figure out ways to comply with social distancing rules and make people feel safe and get as many butts into their seats as they can.

VANEK SMITH: A bunch of them have come to Stephani Robson for help. Stephani works at Cornell University's Hotel School, and she has spent more than 25 years studying restaurants and money, looking at things like the number of tables, money spent per customer per minute, food expenses, labor costs - basically, how to make the money work in one of the toughest businesses around. And Stephani says right now her advice is not always workable.

STEPHANI ROBSON: They're calling me to ask, you know, can I help them redesign their restaurant? And when I do and they're like, we can't make that work for us financially, I just feel bad. So by the time you take into account the fire exiting and the flow of service and maybe flow to the bathroom and you take into account social distancing, you know, you're down to, like, four tables.

VANEK SMITH: Has the restaurant industry been through a time that is this hard?

ROBSON: I don't think so. This is unlike anything I've ever seen before.

GARCIA: Margins are really thin for restaurants. Their costs are high, and every foot of space is precious. Fewer tables just means less money. So Stephani has worked to find other ways to make the math work for restaurants.

VANEK SMITH: Things like fewer items on the menu, which means fewer people in the kitchen preparing food and less food that restaurants have to order. Also, paper plates so restaurants don't need dishwashers, a bigger emphasis on alcohol - which is very profitable - and things like turning parking lots, sidewalk spaces and other areas into patios, places to put tables.

ROBSON: Some restaurants are doing some cool things with combining a limited menu with grocery service. So let's say you're a restaurant and you focus on fresh fish. They have a great supply chain for fresh fish, and so they start selling it as an ingredient that you can buy to take home, along with other things, sort of a - almost like meal kits that you can take home.

GARCIA: Stephani says she has never seen so much creativity in the restaurant industry. But even still, staying open just is not always possible. She recently took a stroll in her hometown of Ithaca, N.Y., to check out restaurant row, just after local restaurants had been allowed to reopen. And as she walked down the street, she says, this one thought kept going through her head.

ROBSON: I know that you're going to edit this out. Holy [expletive] is what I was thinking.


VANEK SMITH: Really? Why?

ROBSON: Well, you know, here it is, July. It's - we're having beautiful weather up here. There are a lot of locals who really enjoy dining out. This is a city that, legendarily, has more restaurant seats per capita than New York City. And if those restaurants on restaurant row on a beautiful Friday evening in July can't make the math work, we have a huge, huge problem.

VANEK SMITH: It's estimated that as many as a quarter of the restaurants in the U.S. will go out of business. Lester Gouvia, owner of Norma G's in Detroit, has been killing himself to stay on the right side of that prediction. He's got a bare-bones staff. He isn't taking a salary himself right now. And he watches every expense - laundry, cleaning, everything - to try to save money.

GOUVIA: The joke I make is if you ever see Lincoln squinting on a penny, it came through my hands...

VANEK SMITH: (Laughter).

GOUVIA: ...Because I squeezed the crap out of it, you know, as best I could. So you just pinch the pennies wherever you can and just - and the idea was to keep going and not shut the doors.

GARCIA: But there are also new expenses, extra expenses. Lester spent extra money trying to make customers feel comfortable so that they will feel safe and hopefully come back. So there's hand sanitizer on every table. There's partitions between bar seats. They also wipe down the credit card machine between every purchase and require everyone to wear a mask unless they're seated at a table.

VANEK SMITH: But there's just so much Lester can do. After all, the restaurant is an enclosed space, and he's dealing with a very contagious virus. Recently, not far from Lester's city of Detroit, more than 170 cases of COVID-19 were traced back to one local restaurant. And Lester says something like that could destroy his business entirely.

GOUVIA: Every day and every minute, that crosses my mind. Every day and every minute, it crosses my mind. I don't know what else I can do. I mean, I could close down and go hide in a hole somewhere at my home. I don't think that's the right answer. I pray, you know? I mean (laughter), I'm not ultrareligious or whatever, but I do pray.

GARCIA: Lester's restaurant has a patio, which he is grateful for, but he worries about what's going to happen when the weather gets colder, especially if the number of coronavirus cases in the U.S. continues to rise and people get skittish about eating out. In spite of everything, though, Lester says he's been surprised at the support that he's gotten from some of his customers.

GOUVIA: You know, we had some loyal regulars that just - they just came and supported us, said we don't want you to close. That was the greatest thing I heard - people coming and saying, thank you. They were thanking me for being here. And I'm looking at them, saying, no, thank you for giving me business. And they were - no, thank you for being here and sticking this out. And that was the greatest gift I could find.

VANEK SMITH: Lester says he is determined to keep Norma G's open and keep pinching his pennies until Lincoln squints and keeps serving up his famous oxtail sliders and try to find a way to start paying himself again, hopefully soon.


VANEK SMITH: This episode of THE INDICATOR was produced by Darius Rafieyan and Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.

[CORRECTION: A previous version of this podcast episode incorrectly stated that the restaurant chain IHOP filed for bankruptcy. The bankruptcy filing was in fact made by a franchisee, CFRA Holdings, which operates 49 IHOP locations in the southeast.]


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